By Polya Lesova and Lisa Twaronite, MarketWatch
LONDON (MarketWatch) — The U.S. dollar traded marginally lower against most major rivals Wednesday ahead of housing data and the Federal Reserve’s statement on monetary policy.
The dollar index (DXY 77.90, -0.10, -0.13%) , which tracks the U.S. unit against a basket of six other currencies, slipped to 77.864 from 77.973 in North American trade late Tuesday.
The euro (EURUSD 1.3671, -0.0016, -0.1169%) bought $1.3685, compared with $1.3682 late Tuesday.
The dollar (USDYEN 82.1400, -0.0300, -0.0365%) bought 82.17 Japanese yen, little changed from ¥82.23 late Tuesday. See real-time currency quotes and tools.
The greenback was pressured earlier by expectations of a further fall in Treasury yields after President Barack Obama called for a five-year freeze on domestic discretionary spending. Obama’s State of the Union speech before Congress called for new spending on clean energy, a lower corporate tax rate and a spending freeze that he said “will require painful cuts.” Read more on Obama's State of the Union speech.
Details of spending cuts are expected to emerge the week of Feb. 14, when House Republican leaders plan a vote on a new short-term government budget.
Data, Fed in focus
Investors are awaiting data on new-home sales for December, due at 10 a.m. Eastern time.
Then, at 2:15 p.m. Eastern, the Federal Reserve will release its monetary policy statement.
Investors will be watching to see what the U.S. central bank says about the outlooks for inflation and growth, which would provide clues to future policy. Read preview of Fed's statement.
Meanwhile, the British pound (GBPUSD 1.5867, +0.0054, +0.3415%) was buying $1.5860, a gain of 0.5% on the day.
The pound added to gains after the Bank of England released minutes from its latest meeting showing a three-way split among monetary policy committee members.
Six members voted in favor of unchanged policy, while three members dissented. Martin Weale joined Andrew Sentance in voting for an increase in the bank rate by 25 basis points. Adam Posen voted to increase the size of the asset purchase program by £50 billion to a total of £250 billion.
“Sterling markets are a roller-coaster right now,” said strategists at FxPro in a note. “The past week has seen strong CPI (something which they should be used to by now), very weak growth data and now the minutes of the January policy meeting which saw another member join the previous lone dissenter in voting for higher rates.”
Data on Tuesday showed that the British economy unexpectedly contracted in the fourth quarter.
